Economic Insights - June 2020

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What is the outlook for the economy?  We’ll give you the insights and analysis you need to make better decisions, so you can make better profits.

The first half of 2020 has been the most disruptive period in recent economic history.  Yet, despite the cataclysm, the S&P 500 was down just 3.8% year-to-date as of June 30; this indicates that investors expect fiscal and monetary policy to overwhelm the negative impact of COVID19.  Meanwhile, the PARE-5 strategy used by the Business Briefings Editors, was up over 25% year-to-date because it invests in game-changing companies that exploit emerging behavioral, demographic, and technological trends. (If you’re interested in finding out more about this strategy, please call 312-706-6850.) 

Whether you’re primarily an investor, manager, worker, or consumer you are facing once in a lifetime turmoil.

China and the United States have entered a de facto “Cold War,” and we will look back on China’s mishandling of Covid19 being the symbolic equivalent of Japan’s attack on Pearl Harbor, but with up to 200,000 American casualties, instead of 3,000.  The United States is already moving to squeeze China’s businesses out of U.S. capital markets and this is just the beginning.

The economic and human pain which China has inflicted upon the world is almost unprecedented. And the ultimate implications are far from certain. However, it’s already clear that we’ve passed a “tipping point” and that the world can never go back to where it was in 2019.

Consider just eight of the most important disruptions.

  1. The China-induced pandemic has accelerated the already advancing trends of deglobalization and industry reshoring, which will provide long-term benefits for American workers, as well as small and mid-sized businesses. The preponderance of firms that aren’t reshoring to their home countries have plans to relocate supply chains from China to other countries in East or South Asia. This will create a windfall for emerging markets like India, Vietnam, and Bangladesh.
  2. Another consequence of the Sino-American Cold War will be the rise of a technological iron curtain, which will proactively exclude China from the next wave of info-tech dominance. Soon...

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